A Health-Tech Monopoly

Another surprise in the stimulus fine print.

Updated Feb. 11, 2009 12:01 a.m. ET

The "stimulus" is the bill that keeps on giving, not least for journalists. Health-care providers and patients may have a different reaction, however, when they learn that Democrats are using the bill to create a health information monopoly that will help centralize government control of the health-care market.

In theory, electronic medical records are among the few stimulus ideas that might do some actual good. Democrats and Republicans agree that exchanging the paper files we mostly use now for digital versions will lower costs, cut down on medical errors, and maybe cure the common cold.

Both the House and Senate stimulus bills include about $20 billion in incentive payments (mainly through Medicare and Medicaid) to encourage the digitization of medical records. Fair enough. But one of the reasons only an estimated 17% to 29% of doctors use health IT is because there are still many technical issues to work out. Different systems must be compatible so doctors can communicate with each other, coordinate care and share information -- and they don't want to invest in a platform that could become as obsolete as HD-DVD.

Democrats have decided that the way to jump this gap is for government simply to pick the next Blu-Ray. Instead of building on a voluntary public-private standard-setting body created by the Bush Administration, the stimulus bill codifies it as a federal office and gives it broad new powers if private companies are not "substantially and adequately" meeting the needs of doctors and hospitals. The health IT outfit will soon be deciding which platforms are up to code and shutting down competitors.

This will certainly muffle innovation, given that high-school dropouts have been known to scam U.S. health bureaucrats out of millions of dollars that should be preventable with off-the-shelf auditing software. Anyway, what's the rush? Democrats give the game away by mandating that most medical providers who aren't linked into the government-approved health information network after 2016 will start to be penalized. Their real political goal is to make a down payment on national health care.

The stimulus actually makes it harder for doctors, hospitals and pharmacies to use health IT, under the guise of "privacy." This is especially dishonest. Insurers already know the health condition of millions of Americans from claims information, which list diagnoses, prescriptions, procedures, etc. The government does too, because it pays so many medical bills through the entitlement programs.

In its pure form, the primary purpose of health IT is to organize all this data in a useful way, so we can get a better sense of health trends and outcomes. Large insurers like Kaiser Permanente and others are starting to do just that on their own, as well as creating the data-based tools that could give consumers a better value for their health dollars. The plug could get pulled from such efforts because the faux privacy provisions are so onerous.

The true political goal is cost control. For the Pete Stark Democrats whose ambition is Medicare for all -- no exceptions -- giving government exclusive control over electronic health information and reporting is a step toward "comparative effectiveness" research. That in turn will be used to impose price controls and deny some types of medical treatment and drugs. And because government is able to skew the whole health system through Medicare and Medicaid, comparative effectiveness could end up micromanaging the practice of medicine.

If three Republican Senators are going to help pass this stimulus, the least they can do is demand that this stalking horse for government-run health care is out. We need to debate this in the open, not slip it into legislation under false cover.

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